Oil scandal: What did ministry bosses know?

The spotlight is now turning on the role of permanent secretaries in the running of parastatals even as the Government moved last week to sack chief executives of two key state corporations.

And as the Government promised investigations, the chairman of the Public Accounts Committee in Parliament, Dr Bonny Khalwale, argued that the net should be widened so that culpability was shared by accounting officers of parent ministries of the parastatals under investigations.

Kenya Pipeline Company managing director George Okungu and his Kenya Tourism Board (KTB) counterpart Ong’ong’a Achieng’ were sent home to pave the way for investigations into irregularities in the two organisations.

Importation

Mr Okungu was sent packing on Friday together with KPC chairman James Kenani over a scandal in which millions of litres of oil held in trust for financial institutions involved in oil importation were irregularly released to the troubled Triton oil company.

The scandal has not only left three international oil companies, including the Kenya Commercial Bank at the risk of losing Sh7.6 billion but also dealt a blow to the integrity and security of the Kenya Pipeline system.

The foreign institutions are Fortis Bank of the Netherlands, Glencore International of the United Kingdom and Emirates National Oil Corporation of the UAE.

In total, 126.4 million litres was irregularly moved out of the KPC system. Under the State Corporations Act, chief executives of parastatals are accountable to permanent secretaries who also nominate alternate directors to the boards of these institutions.

Dr Khalwale said the Government was “pretending” by sacking the managing directors and was not addressing the serious problem of corruption up the ladder.

“We would be happy to see investigations in the two parastatals and those responsible for the irregularities up the ladder be held to account as well,” the Ikolomani MP added.

The Law Society of Kenya said parastatal chiefs cannot run the organisations without constant communication with the parent ministry.

Council member Evans Monari said investigations should not spare ministry officials including ministers and permanent secretaries.

“There is no way chief executives can have full control of parastatals; there is always political interference,” Mr Monari added.

Mr Okungu was on Saturday blocked from entering his office in Kenpipe Plaza in Nairobi’s Industrial Area allegedly to clear his personal effects in what was said to be a precautionary measure by the Ministry of Energy.

Energy permanent secretary Patrick Nyoike said the ministry acted against Mr Okungu after it emerged that senior officials at Kenya Pipeline appeared to have colluded with Triton to release oil without the knowledge of the financiers.

Mr Nyoike said the KPC boss was stopped from accessing his office at the weekend because there was no emergency. “Being a Saturday, and there being no emergency, we thought it was not proper for him to go there. We don’t want people to accuse us of negligence during this time of investigations,” he said.

The Triton matter came up mid-November when Kenya Commercial Bank wrote to KPC asking about the amount of oil they were holding in trust for Triton. KPC said it was holding 30 million litres.

The letter was copied to Glencore, the financiers of Triton, who responded to KCB saying they had financed 38 million litres.